THE ENTERTAINMENT and media industry in Ireland will recover from a “bruising” downturn to record modest levels of growth by 2011, but the recession will accelerate the pace of consumers’ move from traditional formats to digital media, according to a new report.
The annual PricewaterhouseCoopers (PwC) Entertainment and Media Outlook forecasts that Irish media growth will be driven by consumer desires for individual, tailored content, which will be facilitated by strong growth in internet access over the next five years.
Consumer spending on internet access will grow by a compound annual rate of 13 per cent to $759 million (€544 million) in 2013, PwC forecasts.
Media segments that give consumers greater control over their entertainment experience, such as video games and digital television services, will defy the slump in 2009 and record strong levels of growth between now and 2013.
After a flat 2009, filmed entertainment revenues will also grow over the next five years, but spending on all other forms of entertainment and media will decline.
Traditional media dependent on advertisers for revenue will suffer most, with Irish advertising spend predicted to plunge 13 per cent in 2009 and by a further 4.5 per cent next year. By 2013, advertising spend in Ireland will be back at 2006 levels, the report forecasts.
Advertising trends tend to follow movements in gross domestic product, but they are more exaggerated, according to Marcel Fenez, managing partner of PwC’s global entertainment and media practice. “Companies switch off their ad spend very quickly and the decline tends to be steeper, but there’s a quid pro quo in that the speed of the upturn is actually greater,” he said.
Overall, the Irish entertainment and media market will grow by a compound annual rate of 2.7 per cent for the forecast period and will be worth $5.9 billion (€4.2 billion) in 2013. The Irish forecast mirrors the expected global trends, where PwC predicts the industry will eventually shake off the downturn to grow by a compound annual rate of 2.7 per cent over the period.
PwC expects the advertising recession to last 24 to 36 months, but the initial drop in revenues may have been delayed by the “Olympic effect”.
In Olympic years, global advertising spend is boosted by the games, and the high volume of forward advertising spending may have postponed the natural point at which advertisers would have reacted to the negative economic mood by three to six months.
But the “L-shaped” media recession will have changed the nature of the industry by the time the recovery begins, Mr Fenez said.
“When advertisers come back looking for the consumer, the consumer will not be where they left them,” he said.
There is “no hiding place” for traditional media from the digital migration, the report notes. However, “online” will no longer be synonymous with “free”. Consumers will be prepared to pay a premium for high-quality digital content, according to PwC.
“There is a willingness to pay for content that is better,” said Mr Fenez, who cited successful subscription models at the Wall Street Journal and Financial Times.
However, traditional media will have to work out how to adapt their businesses without alienating consumers who do not migrate to the new platforms, he added.
Launching the report, Minister for Communications Eamon Ryan reiterated his pledge that broadband speeds in Ireland would equal or exceed those offered by other EU states in the next three years.
